Initial capital formation

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

What is primitive capital formation? If it is quite simple - a person worked, used personal tools. How much he did with the help of his tools, so much he received. And most importantly, this person did not depend on anyone. The ruling class thought about it and decided: to withdraw the tool of labor and turn the person into a hired worker. Naturally, all the profits will go into the pocket of the new owner. This is how the ruling class carried out the primitive accumulation of capital.

History

The historical process of primitive accumulation of capital is rooted in the era of feudalism. It was the transition from the feudal to the capitalist system that marked the era of the formation of capital. The transition process included two tasks: to deprive a person of the means of production in the form of land plots and turn him into a hired worker. The second task is to concentrate all finances and social means of production (tools of labor) in the hands of the ruling class.

In each state, the process of primitive capital accumulation proceeded in its own way. In America, this is the expulsion of the indigenous population (Indians) inreservations and the further development of slavery. In England - the forcible deprivation of the peasantry of land allotments. Subsequently, England used the confiscated lands to expand the sheep breeding industry, which stimulated the growth of the manufacturing industry.

The process of centralizing finances in the hands of the ruling class also did not contain any tricks: a monopoly on the trade in certain goods, usury, the production of manufactory, the right to sell alcohol products for a fee, the monopolization of railway transportation. Thus, by the beginning of the twentieth century, the initial accumulation of capital in the countries of Europe, as well as in tsarist Russia, was completed. Classes of the proletariat and manufacturers (entrepreneurs) were formed.

Primitive capital accumulation in Russia of the 1990s was accompanied by

some differences. The command-administrative system that regulates the formation of prices and the distribution of resources fell under the pressure of a market economy. The difference between the modern process of capital accumulation and the classical one is that wage labor already existed in Soviet Russia. In the process of transforming the economy, a class of entrepreneurs arose, in which private property was in their hands.

Private property this time no one took away from the people, it was obtained as a result of the privatization of state property. This happened in different ways: entrepreneurship monopolized the service sector, redistribution of funds was carried out in many industries (inmainly preference was given to light industry to the detriment of the military-industrial complex). The fuel and energy complex system was divided among private investors. Add to this a huge influx of foreign loans and the creation of many joint ventures. The reforms carried out contributed to the sharp growth of small and medium-sized businesses. Here is a new formula for the process of capital accumulation.